In : 2/22 @$191.44
Out: 4/28 @$245.67
tecmo
…
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My result similar in terms of timing, though I bought DG calls instead of stock. Jan 2024 $140s purchased Feb 22-23 at $62.56.
So far I’ve sold 80% of the position at average price $113.74.
Current market price for those options on the last 20% is pretty similar, about $115.
Not quite a doubling, but it has been pleasantly quick.
I put that money into GOOGL call options yesterday. Fingers crossed.
(Jan 2024 $1300s picked somewhat at random, entry price $1097.50)
Another doubling doesn’t sound impossible.
Jim
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I put that money into GOOGL call options yesterday. Fingers crossed.
(Jan 2024 $1300s picked somewhat at random, entry price $1097.50)
Will have to wait for the stock split. Even one contract will be over $100K.
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I put that money into GOOGL call options yesterday… Jan 2024 $1300s… Another doubling doesn’t sound impossible.
Jim, what I as the options amateur don’t understand: The last sentence seems to indicate that it’s different for you from buying BRK calls to “control more shares”, that the GOOGL calls for you are more of a “High-class lottery ticket”, that it’s essentially gambling.
IF it’s gambling indeed for you (if not, forget about the following): Why then buying soooo DITM options instead of say Jan’24 $2500’s with their higher leverage?
(I am thinking about those, coming from "If gambling, then properly => Doubling, Tripling or more - - - or ZERO.)
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Jim, what I as the options amateur don’t understand: The last sentence seems to indicate that it’s
different for you from buying BRK calls to “control more shares”, that the GOOGL calls for you are
more of a “High-class lottery ticket”, that it’s essentially gambling.
IF it’s gambling indeed for you (if not, forget about the following): Why then buying soooo DITM
options instead of say Jan’24 $2500’s with their higher leverage?
I don’t consider a position in Alphabet to be a gamble in the way some of my investments are.
(I have some high strike BABA calls which are definite gambles, more for entertainment than investing prudence)
Simply put, Google makes too much money to be risky, and in a way that I don’t see ending any time soon.
For a patient and prudent person, there are only three ways you can lose money on a stock.
(1) Overpay by a lot.
(2) A material deterioration in the prospects of the underlying business
(3) You do the dumb thing: sell at a too-cheap price, which includes having to sell due to margin calls etc.
I’m pretty sure I didn’t do #1, and I’m pretty immune from #3, and my assessment is that #2 is pretty unlikely.
About the worst outcome I can foresee is that, if they have a tough time for a while, it takes a couple of years for the firm to grow fully into the price I paid.
Since I don’t consider it a risk, the call options are simply getting me some cheap leverage.
The cash I have still sitting there is costing me a rate not far from inflation, so it’s roughly free.
Cheaper than recent inflation, perhaps a bit more than upcoming inflation, but same ballpark.
Meanwhile I have that much more in my cash pile. Cash has a whole lot of potential uses.
As for why the options I picked, the time premium was reasonably low.
The implied interest rate is very much lower for low-strike calls than for high strike calls.
It doesn’t take very much leverage at all to turn a good investment into a wonderful one.
I have a mix of stock and low-leverage call, so the overall leverage is not high. It’s 1.53 to 1.
And of course at low enough strikes, there is almost no chance of the option expiring worthless.
Though pleasant, that’s not something I really worry about, as I always have some more funds for buying more time if needed.
I would never put my whole portfolio into calls.
Jim
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